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The Broad Jump

As high-speed Internet lines become easier
to get, the path is clear for all sorts of new services

By

Jason Fry

Updated June 26, 2000 12:01 a.m. ET

Dial-up modems have long been the barrier separating today's Internet hype from Internet reality.

Whizzy technologies such as streaming media and online video games have dominated the headlines, but it's the likes of e-mail and plain-text chat that account for most of users' time online. One reason is that the vast majority of home users remain stuck in the information superhighway's slow lane, using analog modems that make Web wonders such as downloading MP3 music files an exercise in cyber-masochism.

Until late last year, DSL and cable modems were little more than a big tease. Both high-speed technologies were available for only a handful of home users. At last, times are changing. The Baby Bells and cable-television companies, spurred by a number of smaller competitors and rival technologies, are finally taking steps to roll out their services on a nationwide scale.

How Broadband Delivers

Buying Broadband

Life in the Broadband Wilderness

Neither DSL nor cable-modem technology is anywhere near perfect yet: Technical glitches and service issues remain, and demand so outstrips supply that prices aren't likely to come down for some time. Moreover, a high-speed connection won't bypass all of the Internet's bottlenecks, like a popular Web site -- or the limitations of a slow personal computer. But in city after city, the dark ages of the dial-up modem are definitely passing.

Cable-TV companies offer cable modems, which use the network of coaxial cables that bring suites of TV channels into the home to deliver super-fast Internet connections. Telephone companies, meanwhile, offer digital subscriber line, or DSL, which uses electronic trickery to push a wealth of data down your regular phone line -- without tying up the line, so it can be used to make a call.

What's the Difference?

Technically, the chief difference between the two is that a cable-modem line is shared by all the users of a "node," into which a cable company divides its network. (A user's communications are encrypted to guard them from online eavesdroppers.) However, when more users are using the service, there is less capacity available per user, and the service slows. A DSL connection, on the other hand, isn't shared, so speeds should remain constant. How much speed users get depends on their distance from phone-company central offices and the quirks of an individual line.

In the marketplace, much has been made of the differences between the two technologies. The Bells have warned of the horrors of sharing a node with cable-modem "hogs," while the cable companies deride DSL as a jury-rigged technology. But if you've been using a dial-up modem, the much higher speeds offered by either service will seem like a godsend.

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One important difference between broadband and dial-up connections is that with broadband, your high-speed connections typically remain "on." This is convenient, but it also poses a small security risk: A favorite hacker trick is to run programs that roam the Internet probing computers' connections in search of vulnerabilities that can be exploited.

Michael Harris, principal analyst for Kinetic Strategies Inc., a Phoenix market-research firm, says both the phone and cable-TV industries are worried about addressing the issue head-on for fear of spooking potential customers. Both industries tell users how to disable file- and print-sharing capabilities -- a security hole for PCs -- but Mr. Harris and other experts still recommend that broadband users spend the $40 or so it costs to buy and install a personal firewall program. (High-speed connections make downloading the software from the Internet a breeze.) As for the cost of broadband services, the phone and cable-TV companies are still tinkering with pricing. In New York, for example, cable-modem service from Time Warner Cable, a unit of
Time Warner Inc.,
costs $39.95 a month if you're a cable-TV subscriber. (There is a $4.95 surcharge for each extra PC configured.)

What You Get

For your money, a cable modem will let you download information at more than 35 times the top speed of the fastest dial-up modem. And that's far from a cable modem's top speed: Time Warner Cable limits the available download speed to keep greedy Web users from overwhelming the system.

DSL service from
Bell Atlantic Corp.
covers any number of PCs using a given phone line and is divided into pricing tiers. Of Bell Atlantic's customers, 95% opt for its Personal Infospeed service, which costs $49.95 a month for consumers and is more than 10 times speedier at downloading than the fastest dial-up modem. You can get even faster speeds, but it will cost a little more: Professional Infospeed, nearly 30 times faster than a top dial-up modem, costs $99.95 a month, and Power Infospeed, more than 125 times faster than a top dial-up modem, costs $189.95 a month.

Installations, meanwhile, have gotten much more humane. Today, 80% of Bell Atlantic's customers opt to perform their own installations, ordering the necessary hardware and software in a do-it-yourself kit. That option eliminates a $120 installation charge, and Bell Atlantic says it will send a technician out at no charge to the homes of customers who try to install the service themselves and can't resolve problems over the phone with a technician.

Getting a cable modem installed by Time Warner usually takes as much as an hour and involves two installers. Such an installation costs $99 per PC -- $69 if the PC already has the right hardware. Time Warner Cable says it hopes to offer self-installation as an option in New York later this year.

If you get high-speed Internet service from Time Warner Cable and Bell Atlantic, you'll also have to use those companies as your Internet service provider. But you can still use your existing ISP:
America Online Inc.,
which is merging with Time Warner, offers an unlimited-use "bring-your-own-access" plan for $9.95 a month for customers who already have an Internet connection.

The Market

Currently only a handful of companies offer broadband service. But Jupiter Communications, a New York market-research firm, estimates 2.8 million North American households will have cable modems by year end, with an additional one million or so DSL households. And there is still considerable room for growth: More than 48 million North American homes have cable-modem service available to them, while about half as many homes are within reach of DSL service from Bell Atlantic,
SBC Communications
and
BellSouth Corp.
By 2003, Jupiter estimates, 7.7 million households will use cable modems, compared with 5.7 million households for DSL.

Of the companies that offer cable-modem service, RoadRunner and
Excite At Home Corp.
dominate the landscape. RoadRunner, based in Herndon, Va., is controlled jointly by Time Warner and
MediaOne Group Inc.,
which is being acquired by
AT&T Corp.
Under the RoadRunner model, local cable companies -- including Time Warner Cable of New York -- market and install the service and maintain local networks, while the national office maintains the venture's national network, which connects all the local networks.

On the DSL side, the Baby Bells are being pursued by a plethora of smaller DSL companies that have sprung up, most of which resell DSL service bought wholesale from a Baby Bell and then try to beat the Bells on retail prices and customer service. A ruling by the FCC this month made things easier for Bell competitors by requiring the Bells to let resellers lease their existing voice lines.

Other technologies are in the mix as well. Satellite and other wireless services offering high-speed connections in both directions are being developed, but aren't an answer yet for most consumers. Satellite services such as Hughes Electronics Inc.'s DirecPC offer fast downloading speeds, but require a dial-up modem for uploading.

"Clearly, the cable guys are still ahead," says Zia Daniell Wigder, a senior analyst with Jupiter Communications. "DSL has really come into its own, however, and is starting to be a formidable force in the marketplace."

Looking ahead, Ms. Wigder expects the cable-TV companies to keep their lead among consumers -- but sees DSL making inroads among businesses, where the Baby Bells have the advantage of already offering phone service while cable companies don't have many existing lines.

Slow Going

So what took companies so long to get high-speed access to consumers? Internal inertia certainly played a role, but the scope of the task facing the industries was daunting -- and expensive.

To offer cable-modem service to lower Manhattan, for instance, Time Warner Cable had to replace the coaxial cable and amplifiers that originally formed the core of its cable-TV network with a system of fiber-optic lines and nodes. Fiber-optic lines offer a host of advantages over coaxial cable -- they can carry much more data, and the quality of signals sent over them doesn't degrade, resulting in a more reliable network. Existing coaxial connections were left between the nodes and the homes and apartments they serve.

That upgrade began three years ago and demanded "a huge amount of time and engineering," says Joe DiGeso, vice president and general manager of RoadRunner's New York operation. It also took a considerable amount of money: Mr. DiGeso estimates the cost at about $400 million.

Time Warner Cable, which started offering cable-modem service last September in Manhattan, had nearly 15,000 users by mid-May. By the end of 2000, Mr. DiGeso estimates, cable-modem service will be available for all of Manhattan and Staten Island, 80% of Queens households and as much as 60% of Brooklyn. (Currently, the Bronx and part of Brooklyn are served by
Cablevision Systems Corp.
in Bethpage, N.Y.) By the spring of 2001, Mr. DiGeso says, the entire New York City franchise area will be cable-modem-ready.

... Cable Leads in Broadband

Broadband service in millions of U.S. households.

Year

CableModem

DSL

Satellite

ISDN

1998

0.5

0.04

0.1

0.3

1999

1.1

0.2

0.2

0.5

2000

2.8

1.0

0.4

0.8

2001

4.7

2.2

0.7

0.5

2002

6.5

3.8

0.9

0.3

2003

7.7

5.7

1.6

0.3

Source: Jupiter Communications

Bell Atlantic -- which will become Verizon after its merger with
GTE Corp.
-- introduced its DSL service in October 1998, beginning in the Pittsburgh and Washington metro areas. By early May, the company had equipped more than 900 of its 2,500 central offices for DSL, and more than 19 million of the 44 million lines in its service area were ready for the service. Bell Atlantic began offering DSL service in New York last July, though the roll-out really gathered speed late last winter. Today, only a handful of the central offices serving the metro area aren't DSL-ready. At the end of May, Bell Atlantic had about 70,000 consumer DSL customers.

DSL uses conventional copper phone lines, something Bell Atlantic sees as a big advantage in the high-speed access wars. It means the U.S. is already wired for broadband, says Jeff Waldhuter, director of Bell Atlantic Network Data Inc., which handles advanced data services. After all, he says, copper phone lines terminate in every home, office and public place, so to deliver high-speed access, Bell Atlantic just has to put smart electronics at each end of these copper lines to allow the lines to transfer data.

Distance, however, is a limiting factor for DSL today. For technical reasons, the current "distance limit" for DSL is about three miles from a central office. If you're among the approximately 40% of Bell Atlantic customers who don't live within that distance or don't qualify for other technical reasons, you'll have to wait for DSL service even if your central office is already equipped.

Learning as They Go

The industries' slow pace in providing more areas with access isn't all bad for consumers.

Installations should get even simpler as the national roll-outs progress. Both industries have been working -- internally and with partners in the computer-hardware industry -- to develop modem standards with an eye toward a day when a PC will ship with a cable or DSL modem already installed.

The cable-TV industry has learned valuable lessons about how many users can share a node without a degradation in service. While 500-user nodes are now fairly common, some of the industry's first roll-outs used 10,000 users as a standard.

Meanwhile, Bell Atlantic and the Baby Bells are working on technological solutions to extend the range of DSL. At the same time, they're looking beyond DSL entirely. Mr. Waldhuter calls DSL "an interim technology" that he expects will be around for 15 years -- during which time Bell Atlantic will bring super-fast fiber-optic lines directly to more customers.

Until that goal is reached, Mr. Waldhuter says, DSL "allows us to get out to them sooner with affordable technology. When you have 40 million customers, it'd take a long time to dig up the streets."